RNS No 4089p
NORWICH UNION PLC
3 August 1999

PART B

NORWICH UNION PLC
Interim Results and New Business Figures for the six months to 30 June 1999

Contents pages for PART B, PART C and PART D
                                                              Page
Summarised consolidated profit and loss account: non-
technical account                                               9
Reconciliation of Group operating earnings to profit on
ordinary activities before tax                                 10
Consolidated statement of total recognised gains and losses    10
Reconciliation of movements in consolidated shareholders'
   funds                                                       10
Summarised consolidated Group balance sheet                    11
Consolidated cash flow statement                               12
Basis of preparation                                           13
Principal exchange rates                                       13
Analysis of Group operating earnings before tax based on
longer-term investment return                                  14
Territorial analysis of new and gross premiums written -
long-term and investment business                              15
Territorial analysis of premiums written - general business    16
Territorial analysis of balance on the technical account
for general business and underwriting result                   17
Profit from non-insurance operations                           18
Profit on sale of subsidiary undertakings                      18
Taxation                                                       19
Dividends                                                      19
Earnings per share                                             20
Longer-term rates of investment return assumptions             21
Notes to the cash flow statement                               22
Independent review report to Norwich Union plc                 24
Embedded value of worldwide long-term business                 25
Group achieved profit                                          30
Reconciliation of Group operating earnings - 6 months to
   30 June 1998                                                32
Reconciliation of Group profit after tax - 6 months to
   30 June 1998                                                33
Annual premium equivalent                                      34



Page 9

Summarised consolidated profit and loss account
Non-technical account
                                                        Restated      
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
Gross premiums written                                                     
Life and pensions - continuing operations       2,121      1,710      3,675
General business - continuing operations        1,491        917      1,946
General business - discontinued operations          -         28         28
                                                3,612      2,655      5,649
Balance on the technical account for long-        208        193        380
term business
Tax credit attributable to balance on long-        89         87        167
term business technical account
Profit from long-term business operations         297        280        547
before tax
                                                                           
Balance on the technical account for                                       
general business:
    - Continuing operations                        47         35         80
    - Discontinued operations                       -          3          3
                                                   47         38         83
Investment income (including net realised         163        195        365
gains on investments)
Unrealised gains on investments                    22         47         51
Allocated investment return transferred (to)/     (3)         11         21
from the long-term business technical account
Investment expenses and charges                  (29)       (42)       (71)
Allocated investment return transferred to      (111)       (84)      (183)
the general business technical account
Profit from non-insurance operations                6          3          9
Other charges:                                                             
    - Corporate costs                            (18)       (20)       (38)
    - Amortisation of goodwill                    (7)          -        (3)
Exceptional costs of integrating acquired           -          -       (35)
undertakings
Exceptional profit on sale of subsidiary            -         32         31
undertakings
Profit on ordinary activities before tax          367        460        777
Tax on profit on ordinary activities            (101)      (114)      (222)
Profit on ordinary activities after tax           266        346        555
Equity minority interests                         (2)        (2)       (10)
Profit for the financial period                   264        344        545
Dividends                                        (91)       (83)      (251)
Retained profit for the period                    173        261        294
                                                                           
Earnings per share attributable to equity                                  
shareholders
Profit for the financial period - basic         13.5p      17.5p      27.8p
Profit for the financial period - diluted       13.4p      17.5p      27.7p
Operating earnings* - basic                     14.1p      13.3p      25.4p
                                                                           
Dividend per share                              4.65p      4.25p      12.8p

* Operating earnings are reported on the basis of a longer-term rate of
investment return, exclude the change in the equalisation provision and are
stated before integration costs, amortisation of acquired additional value of
in-force long-term business and amortisation of goodwill.

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Page 10
Reconciliation of Group operating earnings to profit on ordinary activities
before tax
                                                        Restated           
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
Operating earnings before tax based on                                     
longer-term investment return before
integration costs, amortisation of
acquired additional value of in-force long-
term business and amortisation of goodwill:
    - Continuing operations                       380        357        712
    - Discontinued operations                       -          4          4
                                                  380        361        716
Amortisation of acquired additional value         (2)          -          -
of in-force long-term business
Amortisation of goodwill                          (7)          -        (3)
Exceptional costs of integrating acquired           -          -       (35)
undertakings
Operating earnings before tax based on            371        361        678
longer-term investment return after
integration costs, amortisation of
acquired additional value of in-force long-
term business and amortisation of goodwill
Change in the equalisation provision             (12)        (6)        (8)
Exceptional profit on sale of subsidiary            -         32         31
undertakings
Short-term fluctuation in investment return
     - long-term business                           -         21         21
     - general business and other                   8         52         55
Profit on ordinary activities before tax          367        460        777

Consolidated statement of total recognised gains and losses
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
                                                                           
Profit for the financial period                   264        344        545
Movement in internally-generated                    5        166        114
additional value of in-force long-term business*
Foreign exchange (losses)/gains                  (39)       (35)         16
Total recognised gains and losses arising         230        475        675
in the period

* Stated before the effect of foreign exchange movements which are reported
within the foreign exchange (losses)/gains line.

Reconciliation of movements in consolidated shareholders' funds
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
                                                                           
Balance at the beginning of the period          5,713      5,098      5,098
Total recognised gains and losses arising         230        475        675
in the period
Dividends                                        (91)       (83)      (251)
New share capital issued during the period          9          5          6
Merger reserve arising on reconstruction            -          -        185
Balance at the end of the period                5,861      5,495      5,713

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Page 11
Summarised consolidated Group balance sheet
                                                                    Audited
                                                         30.6.99   31.12.98
                                                              #m         #m
Assets                                                                
Goodwill                                                     222        218
Investments                                               48,930     47,614
Additional value of in-force long-term business            2,406      2,430
Assets held to cover linked liabilities                    6,607      5,926
Reinsurers' share of technical provisions                    514        483
Debtors and other assets                                   2,151      1,993
Cash at bank and in hand                                     161        175
Deferred acquisition costs                                 1,039      1,007
Total assets                                              62,030     59,846
                                                                           
Liabilities                                                                
Capital and reserves                                                       
Called up share capital                                      193        192
Share premium account                                      1,808      1,800
Other reserves                                             3,330      3,353
Profit and loss account                                      530        368
Equity shareholders' funds                                 5,861      5,713
Equity minority interests                                     43         41
                                                           5,904      5,754
                                                                           
Fund for future appropriations                             7,254      6,336
Technical provisions                                      39,763     39,283
Technical provisions for linked liabilities                6,607      5,926
Provisions for other risks and charges                       311        364
External debt                                                412        610
Commercial paper                                             307        172
Creditors and accruals                                     1,472      1,401
Total liabilities                                         62,030     59,846

Approved by the Board on 2 August 1999.
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Page 12

Consolidated cash flow statement
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
Operating activities                                                       
Net cash inflow from operating activities         317        471        473
Servicing of finance                                                       
Interest paid                                    (23)       (32)       (69)
Taxation                                                                   
Corporation tax and income tax paid              (31)       (22)       (56)
Capital expenditure                                                        
Purchases of tangible fixed assets               (20)       (19)       (48)
Proceeds from sales of tangible fixed assets       7          6          5
                                                 (13)       (13)       (43)
Acquisitions and disposals                                                 
Acquisitions of subsidiary undertakings           (4)          -      (376)
net of cash acquired
Disposals of subsidiary undertakings net            -        104        102
of cash divested
                                                  (4)        104      (274)
Equity dividends paid                           (165)      (148)      (231)
Financing                                                                  
Issue of ordinary share capital                    9          4          5
Decrease in borrowings                          (100)       (80)       (40)
                                                 (91)       (76)       (35)
Net cash (outflow)/inflow                        (10)        284      (235)
                                                                           
Cash (outflows)/inflows were                                               
(divested)/invested as follows:
Increase in cash holdings                          19        129        112
Net portfolio investment                                                   
Payments to acquire investments                   941      1,369      2,539
Proceeds from the sale of investments           (970)    (1,214)    (2,886)
Net (sales)/purchases of investments             (29)        155      (347)
Net investment of cash (outflow)/inflow          (10)        284      (235)

The cash flows presented in this statement relate to shareholder and general
business transactions only.
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Page 13

1.  Basis of preparation

The interim accounts for the 6 months to 30 June 1999, set out on pages 9 to
23, have been prepared on the basis of the accounting policies set out in the
Group's 1998 Annual Report and Accounts and should be read in conjunction with
those policies. The interim accounts do not constitute statutory accounts as
defined in section 240 of the Companies Act 1985. The balance sheet at 31
December 1998 has been abridged from the statutory accounts of the Group for
the year ending 31 December 1998. The auditors' opinion on these statutory
accounts was unqualified.

Profit and loss account information for the two interim periods disclosed is
unaudited but has been reviewed by the auditors, Ernst & Young. Their review
report in respect of the 6 months to 30 June 1999 is on page 24. The results
for the full year 1998 are taken from the Group's 1998 Annual Report and
Accounts which have been filed with the Registrar of Companies, and the
results for the 6 months to 30 June 1998 are taken from the 1998 Interim
Accounts, subject to the restatements noted below.

The profit and loss account for the 6 months to 30 June 1998 has been restated
in accordance with the changes in accounting policies described in note 2 to
the Group's 1998 Annual Report and Accounts. In particular, following
publication of the Association of British Insurers Statement of Recommended
Practice in December 1998, the operating earnings before tax are now based on
the longer-term rate of investment return which has resulted in an increase of
#7 million to the previously published operating earnings before tax for the 6
months to 30 June 1998. In addition, the change in the equalisation provision
of #6 million is now excluded from operating earnings before tax for the 6
months to 30 June 1998. The combined effect of these changes is to increase
the previously published operating earnings before tax from #348 million to
#361 million. There has been no impact on profit before tax or shareholders'
funds arising from this restatement.

Disclosures in respect of discontinued operations represent the results of
Maritime Insurance Company Limited which was sold on 30 June 1998. The New
Zealand companies referred to in note 8, which were also sold during 1998,
have not been disclosed as discontinued operations because their results are
not considered to be material. The profits before taxation realised on these
disposals are shown as an exceptional item in the 1998 consolidated profit and
loss account.

2.  Principal exchange rates

(a) Profit and loss accounts - average rates
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                                           
Australia   -  dollars                           2.52       2.55       2.64
France      -  francs                            9.77       9.99       9.77
Ireland     -  punts                             1.17       1.19       1.16
New Zealand -  dollars                           3.00       2.97       3.10
Spain       -  pesetas                         247.75     252.85     247.44

(b) Balance sheets - closing rates
                                                         30.6.99   31.12.98
                                                                           
Australia   -  dollars                                      2.38       2.71
France      -  francs                                      10.03       9.29
Ireland     -  punts                                        1.20       1.12
New Zealand -  dollars                                      2.97       3.15
Spain       -  pesetas                                    254.32     235.75

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Page 14

3.  Analysis of Group operating earnings before tax based on longer-term
investment return*

Balance on the technical account for long-            Restated**  
term business before tax excluding the       6 months   6 months       Full
amortisation of acquired additional                to         to       year
value of in-force long-term business          30.6.99    30.6.98       1998
                                                   #m         #m         #m
United Kingdom                                                             
Conventional with-profit                           52         62        102
Non-profit, unitised with-profit and unit-linked  205        193        367
                                                  257        255        469
Europe (excluding UK)                                                      
France                                              9          5         20
Ireland                                            16          9         32
Spain                                               3          2          7
Other European Union                                1        (1)          1
                                                   29         15         60
International                                                              
Australia                                          12         10         15
Other                                               1          -          3
                                                   13         10         18
Total long-term business balance on the           299        280        547
technical account before tax
Net investment return on shareholders'             16         17         30
assets - long-term business
Total long-term business                          315        297        577
                                                                           
Balance on the technical account for                                       
general business excluding the change in
the equalisation provision***
                                                                           
United Kingdom                                                             
Motor                                              12         20         34
Household                                          13        (1)          2
Property and packages                              13         10         30
Creditor                                            9          3          5
Other                                               4        (1)          4
                                                   51         31         75

Europe (excluding UK)                                                      
Ireland                                             2          1          4
Spain                                             (3)          1          3
Other European Union                                -        (3)        (8)
                                                  (1)        (1)        (1)
                                                                           
International                                                              
New Zealand                                         6          6         11
Other                                               3          5          3
                                                    9         11         14
Discontinued operations (UK)                        -          3          3
Total general business balance on the              59         44         91
technical account
Net investment return on shareholders'                                     
assets - general business:
   - Continuing operations                         31         32         69
   - Discontinued operations (UK)                   -          1          1
Total general business                             90         77        161
                                                                           
Profit from non-insurance operations                6          3          9
Holding companies                                (13)          4          7
Corporate costs                                  (18)       (20)       (38)
Operating earnings before tax based on            380        361        716
longer-term investment return*
                                                                           
Operating earnings before tax analysed between:
   - Continuing operations                        380        357        712
   - Discontinued operations (UK)                   -          4          4
Operating earnings before tax based on            380        361        716
longer-term investment return*

*   Excluding the change in the equalisation provision, stated before
integration costs, amortisation of acquired additional value of in-force long-
term business and amortisation of goodwill.

**  The restatement is analysed on page 32.

*** The general business balance on the technical account comparatives
incorporate certain re-analysis as set out on page 17.

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Page 15

4.  Territorial analysis of new and gross premiums written - long-term and
investment business
                             New long-term business         Gross premiums
                                                               written
                           Regular            Single                       
                             6        6        6        6        6        6
                        months   months   months   months   months   months
                            to       to       to       to       to       to
                       30.6.99  30.6.98  30.6.99  30.6.98  30.6.99  30.6.98
United Kingdom              #m       #m       #m       #m       #m       #m
Life                                                                       
Conventional with-profit     -        -        -        -      216      232
Unitised with-profit and     8        5      393      156      448      200
unit-linked
Non-profit                  14        8        9        1      112       87
                            22       13      402      157      776      519
                                                                           
Personal pensions                                                          
Conventional with-profit     1        2       15       20       39       51
Unitised with-profit and    12       12      151      124      270      240
unit-linked - individual
Unitised with-profit and    20       14       11       12       51       46
unit-linked - group
Non-profit                   -        1        1        1       18       19
                            33       29      178      157      378      356
                                                                           
Group pensions                                                             
Conventional with-profit     4        4        2        4       25       28
Unitised with-profit and     7        7       56       46       84       71
unit-linked
Non-profit                   1        1        -        -        3        2
                            12       12       58       50      112      101
Annuities                    -        -      333      319      333      319
Others                       2        2       27        -       44       15
                            69       56      998      683    1,643    1,310
Europe (excluding UK)                                                      
France                      18       16       63       52      153      128
Ireland                     10        9       62       31      120       87
Spain                        6        5       11       38       30       57
Other European Union         3        2        3        2       14       11
                            37       32      139      123      317      283
International                                                              
Australia                    5        5      114       74      141      101
Other                        2        2        6        3       20       16
                             7        7      120       77      161      117
Total life and pensions    113       95    1,257      883    2,121    1,710
premiums
                                                                           
Unit trusts and Oeics                                                      
- UK                         1        -       12       22                  
- Europe                     -        -        1        3                  
- International              -        -      144       47                  
Personal Equity Plans        7        -       25       23                  
and ISAs
Total long-term savings    121       95    1,439      978                  

                                                                           
Analysis of UK long-term savings
sales by distribution channel
                                                                           
IFA - Life and pensions products    58       50      940      666
    - Investment products            2        -       19       26
Direct - Life and pensions products 11        6       58       17
       - Investment products         6        -       18       19
Total                               77       56    1,035      728

Single premiums are defined as premiums arising on contracts where there is no
expectation of future premiums. Additional single premiums are permitted on
most contracts of this type and are also classified as single premiums. All
premiums are written by way of direct insurance and the directors consider
that premiums written on the destination basis are not materially different
from premiums written on an origin basis.

UK unitised with-profit and unit-linked pension single premiums shown above
include DSS rebates of #17 million (6 months to 30 June 1998: #21 million) of
which #nil (6 months to 30 June 1998: #12 million) is an accrual in respect of
delayed payments due from the Contributions Agency.

New business premiums from Europe and International businesses have been
translated at the average exchange rates applying for the period. The impact
of exchange rate movements in 1999 results in the restatement of the 1998
total regular premiums from #95 million to #96 million and from #978 million
to #983 million for total single premiums.

An analysis of worldwide new business annual premium equivalent is provided in
the statistical supplement on page 34.

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Page 16

5.  Territorial analysis of premiums written - general business
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
                                                                           
United Kingdom                                  1,288        746      1,589
European Union (excluding UK)                     127        122        243
International                                      76         77        142
Gross premiums written                          1,491        945      1,974
Less reinsurance                                 (72)       (58)      (123)
Net premiums written                            1,419        887      1,851

Net premiums written are analysed as follows:
UK - continuing operations                                                 
Motor                                             544        380        807
Household                                         308        163        338
Property and packages                             141         55        107
Healthcare - private medical insurance             90         80        154
Creditor                                          126         13         28
Other                                              29          6         78
                                                1,238        697      1,512
                                                                           
Europe (excluding UK)                                                      
Ireland                                            39         33         65
Spain                                              66         49        101
Other European Union                               10         19         27
                                                  115        101        193
                                                                           
International                                                              
New Zealand                                        53         54        104
Other                                              13         10         17
                                                   66         64        121
Worldwide - continuing operations               1,419        862      1,826
Discontinued operations (UK)                        -         25         25
Total                                           1,419        887      1,851

The comparative information for the 6 months to 30 June 1998 and full year
1998 has been re-analysed as follows:

1   Creditor insurance, which was previously incorporated within UK Other, is
now analysed as a separate class of business; and

2   The 1998 net premiums written by London & Edinburgh of #72 million
(representing 6 weeks trading to 31 December 1998), disclosed separately in
the Group's 1998 Annual Report and Accounts have now been incorporated within
UK Other. The 1999 London & Edinburgh net premiums written are analysed by
class of business.
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Page 17

6.  Territorial analysis of balance on the technical account for general
business and underwriting result
                         Underwriting result*         Technical result*
                               Restated                   Restated
                      6 months 6 months     Full 6 months 6 months     Full
                            to       to     year       to       to     year
                       30.6.99  30.6.98     1998  30.6.99  30.6.98     1998
                            #m       #m       #m       #m       #m       #m
UK - continuing operations
Motor                     (39)     (23)     (58)       12       20       34
Household                    3     (10)     (16)       13      (1)        2
Property and packages     (11)      (3)        5       13       10       30
Creditor                     3        2        4        9        3        5
Other                      (2)      (4)     (11)        4      (1)        4
                          (46)     (38)     (76)       51       31       75
                                                                           
Europe (excluding UK)                                                      
Ireland                    (2)      (4)      (7)        2        1        4
Spain                      (7)      (3)      (6)      (3)        1        3
Other European Union       (3)      (3)     (11)        -      (3)      (8)
                          (12)     (10)     (24)      (1)      (1)      (1)
                                                                           
International                                                              
New Zealand                  3        3        4        6        6       11
Other                        3        4        3        3        5        3
                             6        7        7        9       11       14
Worldwide - continuing    (52)     (41)     (93)       59       41       88
operations
Discontinued                 -        1        1        -        3        3
operations (UK) 
Total                     (52)     (40)     (92)       59       44       91

*  Underwriting result and technical result are stated before the change in
the equalisation provision of #12 million (6 months to 30 June 1998: #6
million, full year 1998: #8 million).

The comparative information for the 6 months to 30 June 1998 and full year
1998 has been re-analysed as follows:

1   Creditor insurance, which was previously incorporated within UK Other, is
now analysed as a separate class of business; and

2   The 1998 underwriting and technical losses arising from the acquisition of
London & Edinburgh of #11 million and #3 million respectively (representing 6
weeks trading to 31 December 1998), disclosed separately in the Group's 1998
Annual Report and Accounts have now been incorporated within UK Other. The
1999 London & Edinburgh underwriting and technical results are analysed by
class of business; and

3   The underwriting and technical results of the Guernsey based re-insurance
company have been re-analysed based on country of origin rather than country
of destination of insurance risk, and have been reclassified from Other
European Union to UK Other. The full year 1998 underwriting and technical
profits were both #6 million, whilst the equivalent results for the 6 months
to 30 June 1998 were both nil; and

4   Consistent with the presentation adopted in the analysis of Group
operating earnings in note 3, the 1998 underwriting and technical results of
the quota share re-insurance arrangements, disclosed separately in the Group's
1998 Annual Report and Accounts, are now classified within UK Other. 1998 full
year underwriting and technical losses were #6 million and #9 million
respectively. The equivalent results for the 6 months to 30 June 1998 were an
underwriting loss of #2 million and a technical loss of #6 million.

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Page 18


7.  Profit from non-insurance operations

                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
                                                                           
United Kingdom                                                             
Hill House Hammond Limited                          8          5          9
Norwich Union Direct Financial Services Limited   (5)        (6)       (12)
Norwich Union Equity Release Limited and other    (4)          -          -
personal finance subsidiaries
Norwich Union Investment Management Limited         -          2          4
                                                  (1)          1          1
International                                                              
Norwich Union Australia Limited                     7          2          8
Total                                               6          3          9


8.  Profit on sale of subsidiary undertakings

On 30 June 1998 a wholly-owned subsidiary undertaking, Maritime Insurance
Company Limited, was sold for #57 million. Disposal costs totalled #1 million.
Net assets at the date of disposal amounted to #43 million. Under the terms of
the sale agreement Norwich Union provided an indemnity in respect of a
proportion of the claims run-off losses. At 31 December 1998 the purchaser had
notified an intention to invoke the indemnity clause of the sale agreement. On
5 March 1999 a payment of #13 million was made under this indemnity resulting
in no profit or loss arising on the disposal of this subsidiary.

On 6 March 1998 Norwich Union Life Insurance (New Zealand) Limited and Norwich
Union Investment Management (New Zealand) Limited, both wholly-owned
subsidiary undertakings, were sold for #53 million (30 June 1998 sterling
value of proceeds was #54 million). In reporting the full year 1998 results,
the profit on sale of these subsidiaries was disclosed as #31 million (30 June
1998: #32 million), based on the net assets of these companies at 31 December
1997, which amounted to #21 million, and after expenses of sale of #1 million.

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Page 19


9.  Taxation

The tax charge in the profit and loss account comprises:

                                                        Restated           
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
                                                                           
UK corporation tax                                  8         15         27
Overseas tax                                        5         11         13
Other                                             (1)          1         15
Total taxation charge for the period               12         27         55
Tax attributable to balance on long-term           89         87        167
business technical account
Charge to non-technical account                   101        114        222
                                                                           
                                                                           
Tax charge analysed between:                                               
Operating earnings based on longer-term           102         99        207
investment return
Short-term fluctuation in investment return,      (1)         15         15
profit on sale of subsidiary undertakings,
change in the equalisation provision and
integration costs
                                                  101        114        222


10. Dividends

The dividends payable in the profit and loss account comprise:

                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
                                                                           
Interim - 4.65 pence (1998: 4.25 pence)            91         83         83
Final   - (1998: 8.55 pence)                        -          -        168
Total                                              91         83        251


The directors declare an interim dividend for the period of #91 million (6
months to 30 June 1998: #83 million), representing 4.65 pence (6 months to 30
June 1998: 4.25 pence) net per share of the Company, payable on 15 December
1999 to members on the register at 15 October 1999. Irish shareholders who are
due to be paid a dividend denominated in Irish punts will receive a payment
based on the exchange rate prevailing on 2 August 1999. Provision has been
made for an interim dividend of 4.65 pence net per share in respect of shares
issued as at 30 June 1999 and the additional shares set aside to cover claims
arising from non-validators, together being 1,962 million shares.

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Page 20


11. Earnings per share

Earnings per share have been calculated by reference to the profit
attributable to equity shareholders of #264 million for the 6 months to 30
June 1999 (6 months to 30 June 1998: #344 million, full year 1998: #545
million). The number of shares used for the calculation is the weighted
average of (a) shares in issue during the period and (b) share capital listed
but not issued at the time of flotation both in relation to unclaimed shares
and to allow for any necessary adjustments to the entitlements of shareholders
to whom free shares had actually been issued. The aggregate of these
categories of share capital for all three periods is 1,962 million, and it has
been assumed that this number had been in issue throughout 1998 and 1999.

Earnings per share have also been calculated by reference to the same profits
attributable to equity shareholders but based on a fully diluted number of
shares in issue which is made up of the 1,962 million plus 8 million (6 months
to 30 June 1998 and full year 1998: 6 million) share options deemed to be
issued for nil consideration at the period end.

The operating earnings per ordinary share, based on longer-term investment
return but before integration costs, amortisation of acquired additional value
of in-force long-term business and amortisation of goodwill, is calculated as
follows:


                                                        Restated           
                                             6 months   6 months       Full
                                                   to         to       year
                                              30.6.99    30.6.98       1998
                                                   #m         #m         #m
                                                                           
Profit for the financial period                   264        344        545
Short-term fluctuation in investment return       (8)       (73)       (76)
Exceptional profit on sale of subsidiary            -       (32)       (31)
undertakings
Change in the equalisation provision               12          6          8
Exceptional costs of integrating acquired           -          -         35
undertakings
Amortisation of goodwill                            7          -          3
Amortisation of acquired additional value           2          -          -
of in-force long-term business
Tax on short-term fluctuation in investment       (1)         15         15
return, profit on sale of subsidiary
undertakings, change in the equalisation
provision and integration costs
Operating earnings after tax*                     276        260        499
                                                                           
Weighted average number of shares in issue     1,962m     1,962m     1,962m
- basic
Weighted average number of shares in issue     1,970m     1,968m     1,968m
- diluted
                                                                           
Operating earnings per ordinary share* - basic  14.1p      13.3p      25.4p

* Operating earnings are reported on the basis of a longer-term rate of
investment return, exclude the change in the equalisation provision and are
stated before integration costs, amortisation of acquired additional value of
in-force long-term business and amortisation of goodwill.

END OF PART B

MORE TO FOLLOW
 

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